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Liquid Positions

Summary

Liquid Positions is a plugin for Algebra Integral that transforms non-fungible concentrated liquidity positions (NFTs) into fungible ERC20 tokens. By abstracting away the complexity of individual position management, it allows liquidity providers to hold, transfer, and compose their LP shares just like any standard token — unlocking new possibilities for DeFi integrations, secondary market trading, and simplified portfolio management.

Problem In concentrated liquidity DEXs, each position is represented as a unique NFT tied to a specific tick range. This creates friction: positions are difficult to split, combine, or use as collateral in other protocols. Users who want to provide liquidity in the same price range cannot easily pool their capital together, and managing individual NFTs requires direct interaction with low-level position managers.

How It Works When a user deposits liquidity through the plugin, the following happens:

  • NFT Reception The plugin receives the user's position NFT via the onERC721Received hook.
  • Liquidity Extraction It decreases the liquidity from the deposited NFT and collects the underlying tokens. Token Minting — If the tick range is new, a dedicated ERC20 LPToken is created via the LPTokenFactory. If the range already exists, the plugin increases the aggregated position and mints LPTokens proportional to the deposited value.
  • Value-Based Accounting LP token amounts are calculated based on actual value contribution (depositValue × totalSupply / previousPositionValue), ensuring fair representation regardless of when a user enters. To withdraw, users simply burn their LPTokens and receive their proportional share of the underlying tokens plus any accumulated fees.

Features

  • Custom UI The plugin functionality requires custom UI implementation.
  • Fungible LP Shares Each tick range gets its own ERC20 token, making concentrated liquidity positions tradeable, transferable, and composable with other DeFi protocols (lending, vaults, yield aggregators).
  • Multi-User Aggregation Multiple liquidity providers can pool capital into the same tick range. Fees and returns are distributed proportionally based on LPToken holdings.
  • Dynamic Plugin Fee A configurable fee (expressed as a percentage of the base pool fee) is applied on swaps, providing a revenue mechanism for the plugin operator.
  • Automatic Position Management Users never need to interact with NFTs directly. All position creation, liquidity increases, fee collection, and withdrawals are handled by the plugin.
  • Fair Value Minting LP token issuance reflects the real value of contributed liquidity at the time of deposit, preventing dilution and zero-value exploits.